MACD Bitcoin Whipsaws and Fake Out Signals on Bearish & Bullish Territory

Since MACD indicator is a leading technical indicator which sometimes gives fake outs, we shall look at an example of a bitcoin trading whipsaw generated by this MACD cryptocurrency indicator, so as to illustrate why it's always good to wait for a confirmation bitcoin signal.

MACD Bitcoin Indicator Whipsaw - Bitcoin Whipsaws

The MACD indicator gave a buy bitcoin trading signal, when this buy cryptocurrency signal was generated and the MACD indicator line was still below the zero centerline mark. At this point the buy cryptocurrency signal had not been confirmed and it resulted in to a bitcoin whipsaw as illustrated by the MAs which continued to move downwards.

A bitcoin trading whipsaw signal is as a result of dramatic rise and fall in the bitcoin price in a short time and in such a manner that skews the data used in calculating the moving averages that draw the MACD cryptocurrency indicator data. These types of whipsaw fakeout moves are usually brought about because of some news event that can produce market noise.

Traders should have the ability to gauge a bitcoin trading whipsaw and withstand the whipsaw; a bitcoin trading whipsaw might result in to an upswing session and then a downswing session. To minimize the risk of bitcoin trading whipsaws, it's good to wait for confirmation of bitcoin signals by waiting for MACD to cross above or below the zero center-line mark.

Combining MACD Crossover with Center-Line Crossover to Prevent Bitcoin Whipsaws

Buy bitcoin trading signal - When there is a cross-over, followed by a steep rise in bitcoin price and then a center-line crossover the buy cryptocurrency signal is confirmed.

Sell bitcoin trading signal - When there is a cross-over, followed by a steep decline in bitcoin price and then a center-line crossover the sell cryptocurrency signal is confirmed.

1. Buy Bitcoin Signal in Bearish Territory Whipsaw

When a buy cryptocurrency signal is generated in a bearish territory, it may result into a bitcoin whipsaw especially if it isn't followed soon after by a MACD center line cross-over.

In the trading example shown below, MACD cryptocurrency indicator gives a buy cryptocurrency signal even though it is in bearish territory, MACD indicator then turns downward and starts heading down again resulting in to a bitcoin whipsaw. By waiting for center line cross-over it is possible to avoid the whipsaw.

However, in this case there was a brief center line crossing: this bitcoin trading whipsaw would have been hard to trade using this MACD cryptocurrency indicator alone, that's why it is good to combine the use of MACD indicator with another trading indicator. In the trading example illustrated below MACD is combined with the moving average crypto indicators analysis.

MACD Crypto Whipsaw - Buy Signal in Bearish Territory

2. Sell Bitcoin Signal in Bullish Territory Whipsaw

When a sell cryptocurrency signal is generated in a bullish territory, it may result into a bitcoin whipsaw especially if it isn't followed soon by a MACD center-line cross-over.

In the trading example illustrated below, the MACD cryptocurrency indicator gives a sell cryptocurrency signal even though it is in bullish territory, the MACD cryptocurrency indicator then turns up and starts moving upwards again resulting in to a bitcoin trading whipsaw. By waiting for center-line crossover it is possible to avoid the bitcoin trading whipsaw. In the trading example illustrated below by combining this MACD indicator with the MA Crossover Bitcoin Strategy you would have avoided this whipsaw.

MACD Crypto Whipsaw - Sell Signal in Bullish Territory

To avoid bitcoin trading whipsaws completely when trading the btcusd market with this MACD Bitcoin Indicator it is best to use the Center Line Crossover Signal as the Official Buy or Sell Bitcoin Signal of the MACD Crypto Indicator.

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Trade Bitcoin Trading

MACD Bitcoin Whipsaws and Fake Out Signals on Bearish & Bullish Territory

Combining MACD Crossover with Center-Line Crossover to Prevent Bitcoin Whipsaws